An Empirical Analysis of Virtual Goods Permission Rights and Pricing Strategies

Posted: 30 May 2013

See all articles by Dan Ke

Dan Ke

University of Connecticut - Department of Operations & Information Management

Sulin Ba

University of Connecticut School of Business

Jan Stallaert

University of Connecticut - School of Business

Zhongju Zhang

Arizona State University (ASU) - Department of Information Systems

Date Written: June 4, 2012

Abstract

With the rapid development of the virtual world industry in the past few years, trading of virtual goods and services has grown significantly. Virtual goods creators can set different permissions to their creations, such as the length of usage, the ability to copy or modify a virtual good, or the ability to give the good to others. The permissions of virtual goods endow their creators with additional power to control the allocation and exchange of virtual goods in a virtual world. This paper examines how the unique virtual goods permission settings (Copy, Modify, and Transfer) and other factors are associated with virtual goods prices. Using data from a Second Life marketplace, we find that permissions of virtual goods are not random, as creators strategically set the permissions for their virtual creations. Our results show that the Copy and Transfer permissions are significant factors associated with virtual goods prices. The impact of other factors on virtual goods prices is analyzed and managerial implications are discussed.

Keywords: Virtual Worlds, Virtual Goods, Pricing Strategies, Permission Rights

Suggested Citation

Ke, Dan and Ba, Sulin and Stallaert, Jan and Zhang, Zhongju, An Empirical Analysis of Virtual Goods Permission Rights and Pricing Strategies (June 4, 2012). Available at SSRN: https://ssrn.com/abstract=2272129 or http://dx.doi.org/10.2139/ssrn.2272129

Dan Ke

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Sulin Ba (Contact Author)

University of Connecticut School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Jan Stallaert

University of Connecticut - School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Zhongju Zhang

Arizona State University (ASU) - Department of Information Systems ( email )

400 E Lemon St
Tempe, AZ AZ 85287
United States

HOME PAGE: http://https://apps.wpcarey.asu.edu/directory/people/profile.cfm?person=2259040

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